New Amendments to the Kazakhstan Law “On

Transfer Pricing”

Arman MendybayevGRATA Law Firm

Almaty 2010.

Amendments to the Law

Current Provisions Amended Provisions

price range — two and (or) more market prices, published in official information sources

price range – the range of prices, limited to minimum and maximum values of market prices, determined by applying one of the methods for market price determination, or information sources in the procedure, established by this Law

everyday price — a transaction price established in an officially recognized information source for a certain period

everyday price – a transaction price, established for a certain period in officially recognized information sources and (or) a contract between the transaction parties

Innovation• Commission (agent’s) fee – a fee for services of a trade broker trader or

agent in respect of sale-and-purchase of goods, work performance, service rendering, to be paid as an amount or a per cent of the amount of a transaction performed, specified by an individual agreement between a transaction party and a trade broker, trader, or agent;

• Margin - the amount to be received by a trade broker, trader or agent as a result of transactions on sale-and-purchase of goods, works performance and services rendering;

• Spread of margin - a range of values, limited to the minimum and maximum values of the market margin, determined in accordance with the arm’s length principle under comparable economic conditions;

• Remuneration for trade and intermediary duties – compensation by one of the transaction parties in the form of remuneration or a discount (price cut) to the price of goods (works, services) sale for performance of trade and intermediary services;

Innovation

• In this case, a transaction party provides for the information disclosing the components of a margin, if such information is available to the transaction parties; and if the margin includes commission (agent’s) fee of a trade broker, trader and (or) agent and (or) remuneration for trade and intermediary duties, these components are not considered by the authorized bodies in the monitoring

Innovation

• A transaction committed in the territory of the Republic of Kazakhstan, directly interconnected with an international business transaction is a transaction for the sale-and-purchase of goods, works performance and services rendering, which subsequently has been the subject of the international business transaction

• In respect of exchange commodities adjustment of the taxation objects and (or) tax-related object will be subject to a range of prices and differential specified in the information sources, unless otherwise provided for by this article. The list of commodities is to be approved by the Government of the Republic of Kazakhstan

• Adjustment of the taxation objects and (or) tax-related objects should be reflected in the relevant tax reports to be submitted to the tax authorities together with the relevant calculations for each transaction separately

Innovation• Quotation period established by the contract for goods (works, services) sale shall not be

subject to any changes during twelve months after the establishment thereof.• Quotation period, for the purposes of this Law, must be specified according to the terms and

conditions of the contract within the time interval:• as to oil – not more that five calendar days prior to the transfer of the ownership to the

purchaser of goods (works, services), and not more that five calendar days after the transfer of the ownership to the purchaser of goods (works, services);

• as to exchange commodities, except for oil, - not more than thirty calendar days prior to the transfer of the ownership to the purchaser of goods (works, services), and not more that thirty calendar days after the transfer of the ownership to the purchaser of goods (works, services);

• as to non-exchange commodities, prices of which are pegged to the quotation for exchange commodities, - not more than thirty calendar days prior to the transfer of the ownership to the purchaser of goods (works, services), and not more that sixty calendar days after the transfer of the ownership to the purchaser of goods (works, services).

• In case of non-compliance of the quotation period, established by the contract for goods (works, services) sale, with the terms and conditions for determination of a quotation period, established hereby, market prices for goods (works, services) are to be that as of the moment of sale of these goods (works, services).

Innovation

• An arithmetic average value of price quotations for the quotation period is determined according to the following formula:

• S = (P1 + P2 +… + Pn ) / n

• S – an arithmetic average value of arithmetic average values of daily price quotations for the relevant goods (works, services) for the quotation period;

• P1, P2, … , Pn – an arithmetic average value of daily price quotations for the relevant goods (works, services) on the days, price quotation for which has been published during the quotation period;

• n – number of days of the quotation period, price quotation for which has been published.

Innovation

• An arithmetic average value of daily price quotations for the relevant goods (works, services) for the quotation period is determined according to the following formula:

•

• Pn = (Cn1 + Cn2 ) / 2

• Pn – an arithmetic average value of daily price quotations for the relevant goods (works, services);

• Cn1 – the minimum value (min) of the daily price quotation for the relevant goods (work, service);

• Cn2 - the maximum value (max) of the daily price quotation for the relevant goods (work, service).

• In case of no minimum and maximum values of daily price quotations for a day, the actual value of the quotation for the relevant day is to be accepted as an arithmetic average value.

THANK YOU!

ANY QUESTION?Arman Mendybayev

Partner, GRATA Law FirmHead of Transfer Pricing Department

Mobile: +7-701-717-20-10Email: amendybayev@gratanet.com